Diebold CEO Reviews Fate of e-Voting Unit

NORTH CANTON, Ohio — Diebold Inc.'s new chief executive, determined to cut $100 million in costs over three years, said he is reviewing whether the company should continue investing in its embattled electronic voting business.
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CEO Thomas Swidarski insisted in an Associated Press interview that he feels good about the performance of the e-voting operations, even as some shareholders and computer experts complain that Diebold touch-screen voting machines have had a history of hardware and software woes.

"There's pieces and aspects of each of our businesses that I'm going to be looking at with a very critical eye in terms of what the future holds for us," Swidarski said in his first media interview since taking over in December the company best known for its automatic teller machines and security systems.

Risk within any of Diebold's businesses will be weighed against profit potential, Swidarski said. "If any of the pieces don't fit or any of the pieces don't add the value we think is associated with that risk, then we'll make appropriate decisions at that point," he said.

Diebold's former chairman and CEO, Walden O'Dell, resigned Dec. 12 after several years of controversy surrounding Diebold's touch-screen voting machines and O'Dell's financial contributions to President Bush's campaign.

O'Dell gained notoriety in 2003 when he invited people to a fundraiser for Bush with a letter stating he planned to help "Ohio deliver its electoral votes to the president."

Within two days of O'Dell's departure, investors sued Diebold, claiming it made misleading comments about its e-voting business.

Swidarski said Diebold Election Systems, the company's smallest business segment, now offers machines and computer software he feels confident will satisfy certification demands.

"The thing I look at is what customers say," he said. "I can't comment on any kind of lawsuit that's pending, but I'm very confident in terms of the capabilities we have actually delivered."

Swidarski said he has no political connections, and the company has a policy in place for its high-level executives and the Diebold Election Systems subsidiary concerning political contributions.

"Any painful experience you learn from," Swidarski said. "It's not always about technology. There are other aspects of this business.

"I'm very confident that the states that have run this (electronic voting) the longest and have been involved with it the most are the most satisfied," he said. "Much like bank customers have to make decisions, elections officials make decisions. Those folks have a very difficult job, with big responsibilities."

A study on voting systems nationally released Monday by Washington-based Electronic Data Services Inc. said that in this year's November election 66.6 million voters are expected to cast ballots using electronic equipment, or about 39 percent of all the votes cast.

Kimball Brace, president of Electronic Data Services, said that by November about 25 states could have some degree of electronic voting.

Diebold has sold its touch-screen machines to Georgia, Maryland, Utah, Mississippi and portions of Ohio, California, Alaska, Colorado and Florida. Brace said

the company is the biggest vendor of electronic voting machines, and Election Systems & Software and Sequoia Voting Systems are its primary competition.

Diebold tapped into the congressional funding for voting updates after the disputed 2000 presidential election, when punch-card ballots in Florida were still being examined weeks after Election Day.

But Diebold touch-screen voting machines became subject to scrutiny, when questions arose as to the security of the software and whether results could be manipulated. There were also several widely reported glitches, especially in some of California's elections.

The company a week ago reported its earnings slumped 76 percent to $14.6 million in the quarter ended Dec. 31 even as sales rose 15 percent. The earnings dropped mainly because of companywide restructuring and other charges.

Diebold shares rose 9 cents to $39.26 in trading Tuesday on the New York Stock Exchange. The shares have traded within a 52-week range of $33.10 and $57.81.